Predominantly U.S.-focused portfolio with strong tech exposure and moderate emerging market investments

Report created on Feb 23, 2025

Risk profile Info

4/7
Balanced
Less risk More risk

Diversification profile Info

3/5
Moderately Diversified
Less diversification More diversification

Positions

The portfolio is heavily weighted towards the iShares Core S&P 500 UCITS ETF USD (Acc), comprising 93.78% of the total allocation. This high concentration in a single ETF indicates a strong focus on U.S. large-cap equities, reflecting a strategy that prioritizes stability and growth. The remaining allocation is spread across three other ETFs, with modest exposure to emerging markets and private equity. Compared to a balanced benchmark, this portfolio exhibits a high concentration risk in U.S. equities, which may limit diversification benefits. To enhance diversification, consider incrementally increasing exposure to other regions or asset classes.

Growth Info

Historically, the portfolio has delivered a solid Compound Annual Growth Rate (CAGR) of 14.03%, outperforming many traditional benchmarks. However, it has also experienced a maximum drawdown of -34.08%, reflecting significant volatility during market downturns. This duality underscores the importance of balancing growth potential with risk management. While past performance is no guarantee of future results, maintaining a diversified approach could help mitigate large drawdowns. Consider periodic rebalancing to align with changing market conditions and personal risk tolerance.

Projection Info

The Monte Carlo simulation, which uses historical data to project potential future outcomes, indicates an annualized return of 11.65% with a high likelihood of positive returns. The 50th percentile outcome suggests substantial growth, while the 5th percentile highlights potential downside risks. It's important to note that these projections are based on historical data and assumptions, which may not fully capture future market dynamics. Diversification across asset classes and regions could improve resilience against unforeseen events. Regularly review and adjust the portfolio to align with evolving financial goals and risk appetite.

Asset classes Info

  • Stocks
    96%
  • No data
    2%
  • Other
    2%

The portfolio is predominantly invested in stocks, accounting for 96% of the allocation, with minor holdings in unknown and other asset classes. This heavy equity allocation suggests a growth-oriented strategy, but it may also increase susceptibility to market volatility. Compared to a balanced asset allocation model, this portfolio lacks fixed income or cash components, which could provide stability during downturns. To enhance risk-adjusted returns, consider incorporating a mix of bonds or alternative investments to cushion against equity market fluctuations.

Sectors Info

  • Technology
    31%
  • Financials
    13%
  • Consumer Discretionary
    11%
  • Health Care
    10%
  • Telecommunications
    9%
  • Industrials
    7%
  • Consumer Staples
    5%
  • Energy
    3%
  • Utilities
    2%
  • No data
    2%
  • Real Estate
    2%
  • Basic Materials
    2%

With 31% of the portfolio in the technology sector, there is a notable concentration that may lead to increased volatility, especially during periods of rising interest rates. The remaining allocation is spread across various sectors, including financial services and consumer cyclicals, reflecting a moderate level of diversification. This sectoral tilt aligns closely with the S&P 500's composition, which can be beneficial during tech-driven market rallies. To further diversify and reduce sector-specific risks, consider increasing exposure to underrepresented sectors like utilities or basic materials.

Regions Info

  • North America
    93%
  • No data
    2%
  • Asia Emerging
    1%
  • Asia Developed
    1%
  • Europe Developed
    1%

The portfolio is heavily skewed towards North American assets, comprising 93% of the allocation. This significant geographic concentration may limit exposure to growth opportunities in other regions, such as emerging markets or Europe. While the U.S. market has historically delivered strong returns, global diversification can enhance risk management by reducing reliance on a single economy. To optimize geographic diversification, consider gradually increasing exposure to international markets, which could provide additional growth potential and risk mitigation.

Market capitalization Info

  • Mega-cap
    44%
  • Large-cap
    33%
  • Mid-cap
    18%
  • No data
    2%
  • Small-cap
    2%
  • Micro-cap
    1%

The portfolio's market capitalization is primarily concentrated in mega-cap stocks (44%), followed by big and medium caps. This distribution suggests a preference for stability and established companies, which can provide consistent returns. However, the limited allocation to small and micro-cap stocks may restrict potential for higher growth. While larger companies offer lower volatility, integrating more small-cap exposure can enhance diversification and capitalize on emerging growth opportunities. Consider adjusting the market cap mix to align with your risk tolerance and growth objectives.

Risk vs. return

This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.

Click on the colored dots to explore allocations.

The portfolio's current allocation could be optimized using the Efficient Frontier, which identifies the best risk-return balance based on existing assets. This optimization focuses on achieving the highest possible returns for a given level of risk. While the portfolio is already well-aligned with growth objectives, minor adjustments in asset weightings could improve efficiency. Regularly assess the portfolio's position on the Efficient Frontier and make necessary adjustments to maintain optimal risk-return characteristics.

Ongoing product costs Info

  • Xtrackers - LPX Private Equity Swap UCITS ETF 0.70%
  • iShares MSCI Emerging Market Small Cap UCITS 0.74%
  • iShares Core S&P 500 UCITS ETF USD (Acc) 0.12%
  • Weighted costs total (per year) 0.14%

The portfolio's total expense ratio (TER) is 0.14%, which is impressively low and supports better long-term performance by minimizing costs. The iShares Core S&P 500 UCITS ETF, with a TER of 0.12%, contributes to this cost efficiency. However, the Xtrackers - LPX Private Equity Swap UCITS ETF has a higher TER of 0.70%, which could impact returns. Regularly review the cost structure to ensure it aligns with your investment strategy. Consider swapping higher-cost ETFs for more cost-effective alternatives to enhance net returns.

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